Business Combination Requirements - The company must consummate an initial business combination within 18 months from the closing of its initial public offering, extendable to 24 months, or it will cease operations and redeem public shares [156]. - The target business must have a fair market value equal to at least 80% of the value of the assets in the trust account at the time of executing a definitive agreement for the initial business combination [150]. - The company is required to maintain net tangible assets of at least $5,000,001 upon consummation of the business combination to avoid being subject to SEC's "penny stock" rules [143]. - The company is obligated to offer public shareholders the right to redeem their shares for cash at the time of the initial business combination [161]. - If the initial business combination is not completed within 18 months, public shareholders may receive approximately $10.20 per share upon liquidation of the trust account [161]. - The company has until April 22, 2023, to complete the initial Business Combination, failing which it will cease operations and redeem public shares based on the amount in the Trust Account [331]. - The company has the option to extend the Termination Date up to six additional months, provided it deposits either $140,000 or $0.04 for each outstanding public share into the Trust Account for each extension [333]. Shareholder Redemption and Rights - On January 18, 2023, holders of 24,703,445 Class A ordinary shares redeemed their shares for cash at a redemption price of approximately $10.35 per share, totaling an aggregate redemption amount of $255,875,757, leaving approximately $30 million in the trust account [145]. - If too many public shareholders exercise their redemption rights, the company may not meet closing conditions for a business combination, potentially leading to an inability to proceed with the transaction [143]. - The absence of a specified maximum redemption threshold may allow the company to complete a business combination that a substantial majority of shareholders do not agree with [205]. - Public shareholders who redeem shares in connection with a shareholder vote may not receive funds from the trust account if the business combination is not completed within the specified timeframe [233]. - Shareholders may be liable for claims against the company to the extent of distributions received upon redemption of their shares [236]. Financial Condition and Market Risks - The company may not be able to raise necessary equity and debt financing due to market conditions, impacting its ability to consummate a business combination [153]. - The company may face intense competition from other entities for business combination opportunities, which could limit its ability to complete a transaction [161]. - The company may incur substantial debt to complete a business combination, which could adversely affect its financial condition and shareholder value [255]. - The incurrence of debt may lead to default and foreclosure on assets if operating revenues are insufficient to meet obligations, impacting financial stability [256]. - The company may face increased vulnerability to adverse changes in economic conditions and limitations on its ability to obtain additional financing due to existing debt obligations [256]. - The company may face challenges in completing an initial business combination due to recent increases in inflation and interest rates, which could lead to price volatility [298]. Management and Governance - Initial shareholders and management team members have agreed to vote in favor of the initial business combination, increasing the likelihood of receiving requisite shareholder approval [140]. - The personal and financial interests of officers and directors may create conflicts of interest in selecting a target business [224]. - Certain officers and directors may have economic interests in the sponsor that conflict with those of public shareholders [226]. - The company does not have a policy prohibiting officers and directors from having financial interests in transactions involving the company [219]. - The company may pursue acquisition opportunities jointly with its sponsor, which could create conflicts of interest between the parties involved [189]. Operational Challenges - The ability to complete a business combination may be adversely affected by the COVID-19 pandemic, impacting global commercial activity and supply chain operations [151]. - The company may face challenges in assessing the management of a prospective target business, which could affect the success of the initial business combination [193]. - The company has not yet selected a specific target business for its initial business combination, making it difficult to evaluate potential merits or risks [171]. - The company may pursue acquisition opportunities in various sectors, even those outside of its management's expertise, which could complicate risk assessment [173]. - The company has limited operating history and no revenues, making it challenging to evaluate its ability to achieve business objectives [287]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," which allows it to take advantage of certain exemptions from disclosure requirements [273]. - The company is classified as a "smaller reporting company," which allows it to provide only two years of audited financial statements until it exceeds a market value of $250 million or annual revenues of $100 million [275]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing a business combination [276]. - The company may be classified as a passive foreign investment company (PFIC), which could lead to adverse U.S. federal income tax consequences for U.S. investors [293]. - The company is subject to federal securities laws of the United States, but the rights of shareholders under Cayman Islands law differ significantly from those in the U.S. [280]. Financial Performance - The company had a net income of $14,334,250 for the year ended December 31, 2022, primarily due to a change in the fair value of warrant liabilities amounting to $13,179,936 and investment income of $3,984,431 from marketable securities held in the Trust Account, offset by an operational loss of $2,830,117 [335]. - As of December 31, 2022, the company reported cash of $614,767, with liabilities including $1,866,992 in accrued offering costs and $315,539 payable to related parties [337]. - The net proceeds from the initial public offering and the sale of private placement warrants amounted to $281,520,000, available for the initial business combination after accounting for $9,660,000 in deferred underwriting commissions and estimated non-reimbursed expenses [195]. - The company has not paid any cash dividends to date and does not intend to do so prior to completing its initial business combination [320]. Market and Investment Risks - Increased competition from other special purpose acquisition companies may limit the availability of attractive targets and increase the cost of business combinations [154]. - The market price of Class A ordinary shares may be adversely affected by changes in the fair value of the warrant liability [271]. - The potential issuance of additional Class A ordinary shares upon warrant exercise could make the company a less attractive acquisition vehicle [268]. - The structure of the units may cause them to be worth less than units of other blank check companies due to the fractional warrant issuance [269]. - The company may face significant adverse consequences if its securities are delisted from Nasdaq, including reduced liquidity and increased regulatory scrutiny [231].
ESGEN Acquisition (ESAC) - 2022 Q4 - Annual Report